Stories
GST Council Rationalises Penalties and Removes Arrest Provisions for Tax Evasion
- •The GST Council has rationalised the maximum imprisonment for GST offences to up to 5 years, a fine, or both.
- •The punishment has been changed from imprisonment and fine to imprisonment or a fine or both, giving courts discretionary power.
- •The requirement for a minimum six-month imprisonment has been removed, and imprisonment is no longer compulsory upon conviction.
- •The threshold for launching prosecution in GST evasion cases has been raised from Rs 1 crore to Rs 5 crore.
- •In a major move towards decriminalisation, arrest provisions under GST by tax officers have been removed, effective April 1 2027.
Key Questions Answered
The GST Council rationalised the maximum imprisonment term for tax evasion exceeding Rs 10 crore to up to five years, a fine, or both, while cases between Rs 5 crore and Rs 10 crore face up to two years. Additionally, the mandatory minimum imprisonment of six months has been removed to grant courts full sentencing discretion, and these changes take effect from April 1, 2027.
In a major decriminalisation initiative, the GST Council removed standalone arrest provisions under the law so that no person will be directly arrested by a GST officer. Furthermore, the financial threshold for launching prosecution before a competent court was raised from Rs 1 crore to Rs 5 crore.
The punishment structure is modified from 'imprisonment and fine' to 'imprisonment or a fine or both', ensuring that imprisonment is no longer compulsory upon conviction. This allows the court complete discretion in awarding penalties based on individual case circumstances.
